Live Nation and Ticketmaster Prepare to Merge

Live music behemoths Live Nation and Ticketmaster are apparently negotiating a proposed merger, according to the Wall Street Journal (subscription required), after the ticketing contract between the two companies ended at the beginning of the year. Although neither board has approved the deal, the talks are said to be in a fairly late stage.

Late last fall, Live Nation representatives said they were excited about rolling out their own ticketing service to replace their contract with Ticketmaster. Instead, Live Nation, the biggest concert promoter in the world, and Ticketmaster, the biggest ticketing company in the world, want to merge their operations into a single company called Live Nation Ticketmaster through a deal in which no cash would change hands.

Some had hoped the expiration of Live Nation’s contract with Ticketmaster would result in a reduction of the convenience fees that have made Ticketmaster one of the most reviled brands among music fans. And with Live
Nation and Ticketmaster competing, the door might open for smaller companies to join the ticketing fray, causing prices to drop as ticketers and venues competed for audience. (For the record, these convenience fees do not go completely to Ticketmaster, but are split between various parties including artists if their profile is high enough.)

The Journal says one potential sticking point is about who will lead the company, but that could be small potatoes compared to potential antitrust issues with the deal. Neither Ticketmaster nor Live Nation has returned our requests for comment so far, but sources we’ve canvassed raised the specter of the Federal Trade Commission blocking the deal on antitrust grounds.

Although the government has other concerns at the moment, a number of parties have significant incentive to try to get the FTC to pay close attention to the deal. According to a Reuters source, record labels and managers as well as smaller ticketing companies and concert promoters are likely to oppose it. The same record label source mentioned that President Barack Obama is likely to oppose the merger as well.

A combined Live Nation Ticketmaster entity could be greater than the sum of its parts — at least as far as the company is concerned. By controlling venues, ticketing, ancillary revenues derived from concerts and in some cases acting as an artist’s record label as part of the "360 deals" Live Nation has signed with high-profile artists like Nickelback and Jay-Z, the new company would be able to cross-promote and market to music fans using a vast database of user information.

However, the deal would marginalize other players in the live music space, and cost music venues any leverage they hoped to gain when Live Nation started doing its own ticketing this year. As for fans, it’s hard to see how they would benefit from one company owning so much of the music business, even if the combined entity eliminates those irksome convenience fees.